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Before: Shri H.S. Sidhu & Shri L.P. Sahu
ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the Revenue against the order dated 11.06.2015 of ld. CIT(A)-I, Gurgaon in relation to deletion of penalty u/s. 271(1)(c) of the IT Act, for the assessment year 2009-10. The grounds raised in appeal read as under : “1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in fact and law in cancelling the penalty of Rs.70,09,07,491/- imposed u/s. 271(1)(c) of the Income Tax Act.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in fact and in law in cancelling the penalty u/s. 271(1)(c) on account of excess deduction claimed in terms of provision of section u/s. 80IAB(10)
ITA No. 5133/Del./2015 2 read with section 80IAB(3) of the Act to the tune of Rs.206.20 crores for making exaggerated and unreasonable claim of benefit under the Act.”
The brief facts of the case are that for the year under consideration the assessee claimed deduction u/s. 80IAB to the tune of Rs.858,74,99,121/- being the income from development of Special Economic Zone. The AO rejected the claim observing that this consideration is only a profit accruing to the assessee from the sale of assets, i.e., bare shell buildings to its co- developers, which is not eligible for deduction u/s. 80IAB of the Act. In appeal before the ld. CIT(A), the first appellate authority restricted the claim of the assessee u/s. 80IAB from Rs.854.74 crores to Rs.652.54 crores and disallowed the excess deduction of Rs.206.20 crores. The Assessing Officer, thereafter, initiated penalty proceedings u/s. 271(1)(c) of the Act and after considering the submissions of the assessee, imposed a penalty of Rs.70,09,07,491/- equivalent to 100% of the tax sought to be evaded by furnishing inaccurate particulars of income of Rs.206,20,99,120/-. The ld. CIT(A) cancelled the penalty vide impugned order observing as under : 6. I have considered the facts of the case and the written submission of the appellant. It is not in dispute that the very basis of penalty stands quashed by the Hon'ble Income Tax Appellate Tribunal for the AY 2009- 10, which, vide their Consolidated Order dated 13.11.2014 (in & 1316 and ITA Nos. 1475 & 1467 in the appellant's' case and group associate namely, DLF Info city Developers (Chennai) Ltd. & corrigendum dated 19.11.2014), allowed appellant's appeal in full against the Order of the Commissioner of Income Tax (Appeal), and dismissed department's
ITA No. 5133/Del./2015 3 appeal. Therefore, following the order of Hon'ble Delhi ITAT, I am of the considered view that the penalty of Rs. 70,09,07,491/- imposed u/s 271(l)(c) of the Act is devoid of merits and deserves to be cancelled.
Furthermore, on the merits of the case, it is revealed that on identical facts, wherein the Order of the Hon'ble Income Tax Appellate Tribunal for the A. Y. 2008-09 deleting the entire addition, was available with the Assessing Officer, penalty u/s 271(1)(c) of the Act had not been imposed. The Assessing Officer, considering the facts of the case ought to have exercised her jurisdiction u/s 275(1)(a) of the Act, and instead of levying the penalty and creating a huge demand, should have kept the penalty proceedings in abeyance, as she herself had not imposed the penalty on identical facts in the A. Y. 2008-09. This view draws support from the decisions of the Hon'ble Delhi High Court, in the case of CIT Vs. Mohair Investment and Trading Co. P. Ltd. dated 30.09.2011 in reported as (2012) 345 ITR 51, wherein the issue of limitation as enshrined U/s 275 (1) (a) of the Income Tax Act, 1961 was considered. The Hon'ble High Court of Delhi held as under: "11. Thus we are of the view that the proviso to Section 275 (1) (a) of the Act does not nullify the availability to the Assessing Officer of the period of limitation of six months from the end of the month when the order of the ITAT is received by the Assessing Officer......"
In addition, another significant fact is that the Ld. CIT(Appeals) has allowed full relief to the appellant on identical facts for the Assessment Years 2010-11 and 2011-12. Thus, not only in the current year but in preceding and succeeding years as well, no addition has been made/sustained on the issue which has been the subject matter of penalty u/s 271(1) (c) of the IT Act.
Hence, after a careful consideration of the facts of the case, particularly the order of Hon'ble Delhi ITAT deleting the entire addition and subsequent year's orders of the Ld. CIT(A) allowing full relief to the appellant, the penalty of Rs.70,09,07,491/- imposed u/s. 271(1)(c) of the Act is directed to be cancelled and accordingly, all grounds of appeal are allowed.”
ITA No. 5133/Del./2015 4
The ld. DR, relying on the grounds of appeal and reiterating the observations of the Assessing Officer, submitted that the ld. CIT(A) was not justified in cancelling the penalty u/s. 271(1)(c) on account of excess deduction claimed in terms of provision of section u/s. 80IAB(10) read with section 80IAB(3) of the Act to the tune of Rs.206.20 crores for making excess claim of deduction.
4. On the other hand, the ld. AR relied on the order of the ld. CIT(A).
5. Having considered the rival submissions in the light of material available on record, we find no justification to interfere with the impugned order. It is notable that the addition, on the basis of which the impugned penalty has been imposed, observing inaccurate particulars of income furnished by the assessee, has been deleted by the Tribunal, as also observed by the ld. CIT(A) in the impugned order reproduced above. Therefore, once the very basis of imposition of penalty, stands collapsed, there remains no justification to sustain the penalty in the instant case. The ld. DR could not be able to rebut the findings recorded by the ld. CIT(A) based on the decision of Tribunal, decision of Hon’ble Delhi High Court and the acceptance of such claim of deduction in other assessment years by the department itself. We
ITA No. 5133/Del./2015 5 accordingly, find no good ground to disturb the decision reached by the ld. CIT(A) in the impugned order while canceling the penalty. Hence, the appeal of the Revenue has no merit and deserves to fail.